Czech Wealthy Magnate Assumes Prime Ministerial Post, Promising to Disentangle Business Empire

Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new head of government, with his complete ministerial team anticipated to take their posts in the coming days.

His confirmation came after a fundamental stipulation from President Petr Pavel – a public commitment by Babis to cede oversight over his sprawling food-processing, agriculture and chemicals holding company, Agrofert.

"I vow to be a prime minister who champions the interests of the entire populace, domestically and internationally," declared Babis following the swearing-in at Prague Castle.

"A prime minister who will work to establish the Czech Republic the best place to live on the entire planet."

High Aspirations and a Far-Reaching Business Presence

These are high-reaching aspirations, but Babis, 71, is used to large-scale thinking.

Agrofert is so thoroughly integrated in the Czech business landscape that there is even a dedicated app to help shoppers bypass purchasing products made by the group's numerous subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a warning symbol appears.

Babis, who previously served as prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will include members of the far-right SPD and the EU-skeptical "Drivers for Themselves" party.

The Promise of Divestment

If he fulfills his vow to withdraw from the company he established, he will no longer benefit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he claims he will have no information of the conglomerate's financial health, nor any capacity to affect its performance.

State decisions on government procurement or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have relinquished ownership of or gain financially from, he adds.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an independent administrator, where it will remain until his death. At that point, it will be inherited by his children.

This arrangement, he remarked in a online address, went "exceeded" the stipulations of Czech law.

Outstanding Issues

What kind of trust remains unclear – a Czech trust, or one based abroad? The notion of a "fully independent trust" does not exist in Czech legislation, and an team of legal experts will be needed to devise an arrangement that works.

Skepticism from Anti-Corruption Groups

Watchdog organizations, including Transparency International, remain unconvinced.

"A blind trust is not a solution," argued David Kotora, the head of Transparency International's Czech branch, in an comment.

"True separation is absent. [Babis] is familiar with the managers. He knows Agrofert's portfolio. From an position of power, even at a EU level, he could theoretically intervene in matters that would affect the sector in which Agrofert operates," Kotora cautioned.

Wide-Ranging Interests Beyond Agrofert

But it's not just food – and it's not only Agrofert.

In the eastern suburbs of Prague, a private health clinic stands near the O2 arena. While it is owned by a company called FutureLife a.s, that company is controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

Hartenberg also operates a chain of reproductive clinics, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The reach of Babis into multiple areas of Czech life is broad. And as prime minister, for the second time, it is poised to become even wider.